For in-house counsel and those at the frontline of contractual performance issues here is our high-level guidance on Force Majeure, Business Interruption, Frustration and issues related to insured risks.
For more information or related COVID-19 issues impacting your business, please contact Barry Cahir (Litigation and Insolvency), Thomas O'Dwyer (Litigation), Paul Gough (Employment) or Damian Maloney (Corporate and Commercial). To see our recent update on the steps employers should be considering here.
Force Majeure
Murdoch's Dictionary of Irish Law defines a Force Majeure as 'An overpowering event which could not be anticipated eg an Act of God.'
Our headline guidance is that if your contract contains an appropriate Force Majeure clause and COVID-19 is demonstrably the cause of non-performance of a contract (or part of a contract) that it is likely to be a good defence to any claim for damages for that non-performance.
The devil is in the detail and our guidance is subject to the caveat that the clause in question will need to be carefully examined in light of the circumstances and, in every case, that strict compliance with any notice, mitigation or other provisions of the clause is essential.
Business Interruption and Frustration of contract
Absent a Force Majeure clause, it is possible to defend a claim for breach of contract on the basis that performance has been rendered impossible due to an unavoidable change in circumstances. This is a more subjective analysis and therefore more challenging.
However, our view is that where performance is rendered impossible due to Government imposed restrictions to deal with the COVID-19 pandemic, that would be a good defence to a claim for breach of contract.
This view is subject to the caveat that there may be countervailing provisions in a contract or surrounding circumstances which can exclude reliance on this principle.
Insured risks
It is worth considering if you have any cover for business interruption or similar risks. As with all insurance contracts however, the most critical thing is early notification to your broker or insurer to avoid cover being denied.
Key points
- Risk assessment – assess the possible impact of an outbreak and put in place preventative and protective measures such as appropriate notices to counter-parties and/or insurers
- Keep up to date with developments from official Government sources on latest guidelines
- Communicate with your business partners – keep them appraised of any measures that are being implemented and the legal rationale for same
For more information or to discuss any COVID-19 related issues impacting your business, please get in touch with Barry Cahir (Litigation and Insolvency), Dorit McCann (EU, Competition & Procurement), Thomas O'Dwyer (Litigation), Sharon Delaney (Litigation), Damian Maloney (Corporate and Commercial), Aidan Marsh (Commercial Property), Gerry Gallen (Commercial Property), Sandra Masterson Power (Employment), Paul Gough (Employment), your usual Beauchamps contact.